Economic Update for September 24, 2012

HOME SALES SOAR, HOUSING STARTS INCREASE
According to the National Association of Realtors, the volume of residential resales hit a 27-month peak in August. Sales rose 7.8% for the month while the inventory of unsold homes decreased to 6.1 months (the smallest estimate since January). There was also a 9.5% year-over-year gain in the median sale price. Short sales and foreclosures represented 22% of last month’s transactions, down from 31% in August 2011. Housing starts were up 2.3% in August, the Commerce Department noted, with groundbreaking on single-family projects up 5.5%.^1,2

SLIGHT RETREAT FOR LEADING INDICATORS
The Conference Board’s Leading Economic Index slipped 0.1% for August in contrast to its 0.5% July increase. The LEI now stands at 95.7 (it was at 100 when created in 2004); stock prices and yield spreads have been the big factors aiding its overall advance since February.³

OIL PLUMMETS, GOLD & DXY BOTH ADVANCE
NYMEX crude tumbled 6.17% last week on ebbing demand, settling Friday at $92.89 a barrel. A gallon of gas was averaging $3.83 at the pump at the end of the week, according to AAA. COMEX gold closed at $1,778.00 Friday after rising 0.30% in five days; the U.S. Dollar Index achieved a weekly gain of 0.71%.⁴

PLACID WEEK SEES INSIGNIFICANT LOSSES
The Dow (-0.10% to 13,579.47), NASDAQ (-0.13% to 3,179.96) and S&P 500 (-0.38% to 1,460.15) shifted out of rally mode last week, but all three indices were having an unusually good September as of Friday’s closing bell – DJIA, +3.73%; S&P, +3.81%; NASDAQ, +3.68%. The CBOE VIX – the “fear index” – settled down at 13.97 Friday. The Dow went red last week for the first time in three weeks.^4,5,6

THIS WEEK: On Monday, EU leaders may announce an economic reform program for Spain that would permit that nation to receive a bailout; stateside, Lennar issues earnings. Tuesday, July’s Case-Shiller Home Price Index and FHFA Housing Price Index arrive, along with the Conference Board’s September consumer confidence poll. Wednesday, the Census Bureau issues the August new home sales report. Thursday, reports on August durable goods orders, August pending home sales and weekly jobless claims complement the final estimate of Q2 GDP from the federal government and earnings from Micron, Discover, Accenture, RiM and Nike. Friday offers September’s final University of Michigan consumer sentiment survey, August consumer spending data and earnings from Walgreens.

 Sources: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov – 9/21/12^5,7,8,9 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

WEEKLY QUOTE
“Treasure the love you receive above all. It will survive long after your good health has vanished.”
– Og Mandino

WEEKLY TIP
The fine print on a lease or a mortgage is always worth reading. Ask the business owners and homeowners who have learned this from experience.

WEEKLY RIDDLE
How many cubic yards of dirt are in a hole that is 9′ deep, 8′ long and 1′ wide?

Last week’s riddle:
What lives above a star but never burns, has 11 neighbors, and can replace the letters P, Q, R or S in some cases?

Last week’s answer:
The number 7 (on most telephone keypads).

Citations.
1 – blogs.barrons.com/stockstowatchtoday/2012/09/19/home-sales-data-gives-market-a-spark-builders-trim-gains/ [9/19/12]
2 – www.usatoday.com/money/business/story/2012/09/19/existing-home-sales-housing-starts-jump-in-august/57806124/1 [9/19/12]
3 – www.conference-board.org/pdf_free/press/PressPDF_4598_1348129105.pdf [9/20/12]
4 – money.msn.com/market-news/post.aspx?post=5d36f6bd-6f3a-4dad-b5c7-db819e3b1e8d [9/21/12]
5 – www.cnbc.com/id/49032125 [9/21/12]
6 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F21%2F11&x=0&y=0 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F21%2F11&x=0&y=0 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F21%2F11&x=0&y=0 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F21%2F07&x=0&y=0 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F21%2F07&x=0&y=0 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F21%2F07&x=0&y=0 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F20%2F02&x=0&y=0 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F20%2F02&x=0&y=0 [9/21/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F20%2F02&x=0&y=0 [9/21/12]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/21/12]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/21/12]
9 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm71002.pdf [7/10/02]

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